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US dollar rises to NT$29.635 in Taipei

TAIPEI--The U.S. dollar rose against the Taiwan dollar Tuesday, gaining NT$0.005 to close at the day's high of NT$29.635 after moving in a narrow range in moderate trading, dealers said.

The local central bank stepped in, as it has done recently, to push the U.S. dollar back into positive territory late in the session after it lost ground earlier in the day, they said.

The greenback opened at NT$29.630 and moved to a low of NT$29.551 before rebounding. Turnover totaled US$569 million during the trading session.

The U.S. dollar opened flat, but selling emerged to drag the unit into the red as investors took cues from a move by the People's Bank of China to raise the reference rate for the Chinese yuan against the greenback, dealers said.

The latest yuan reference rate was the highest since Chinese authorities launched foreign exchange reforms in July 2005, prompting traders in the region to think that China will allow its currency to appreciate and drive other regional currencies higher, they said.

Such speculation led traders here to cut their U.S. dollar holdings and pick up the Taiwan dollar throughout the session, they added.

In addition to the higher yuan, the strength of the South Korean won and the euro placed more downward pressure on the U.S. dollar in the local foreign exchange market.

The won hit a two-year high against the U.S. dollar amid improving sentiment toward the regional economy, while the euro touched a six-week high as traders were upbeat about industrial production data in France due later in the day, dealers said.

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